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Forum
-> Household Management
-> Finances
amother
OP
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Tue, Jan 24 2023, 10:21 am
Need help from the saavy ones. If I set up a Roth IRA at 40, approximately how much will it be worth at retirement assuming I'm contributing approx 6,000 annually
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amother
Burntblack
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Tue, Jan 24 2023, 10:24 am
What age do you plan to retire?
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amother
Burntblack
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Tue, Jan 24 2023, 10:32 am
If you contribute 6k a year starting at age 40 and plan to retire at 65, your contributions will be $150,000.
Historically, the 30 year return of the S&P 500 has been roughly 10-12%.
If you estimate a 11% annual return, your estimated retirement savings at age 65 will be $788,066.
$150,000 contributions + 638,066 growth.
(This was calculated using the Dave Ramsey Calculator)
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amother
OP
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Tue, Jan 24 2023, 10:51 am
what about a whole life insurance that only allows you to pay into it for 10 years (6,000 a year) continues to grow the longer you keep it there
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ellacoe
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Tue, Jan 24 2023, 7:31 pm
There are tax advantages to the Roth IRA, what are the tax ramifications of the Life Insurance policy?
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jd1212
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Tue, Jan 24 2023, 8:08 pm
I sell whole life insurance. It’s structured very similarly to Roth IRAs- you contribute post-tax and the growth of dividends are non-taxable because it’s technically an insurance policy. If you withdraw/loan money from the policy correctly, there are no taxes either.
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jd1212
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Tue, Jan 24 2023, 8:19 pm
amother Burntblack wrote: | If you contribute 6k a year starting at age 40 and plan to retire at 65, your contributions will be $150,000.
Historically, the 30 year return of the S&P 500 has been roughly 10-12%.
If you estimate a 11% annual return, your estimated retirement savings at age 65 will be $788,066.
$150,000 contributions + 638,066 growth.
(This was calculated using the Dave Ramsey Calculator) |
Dave Ramsey is truly committing malpractice putting those numbers out as expected returns for investors because he doesn’t take into account sequence of returns (a 20% downturn when you’re 63 and have the most money in your account drastically hurts your portfolio vs. that in year 2 of contributing).
Fidelity released a study showing the average investor experiences a lifetime return of 4.5% post-tax. Similar to whole life policies over their lifetime as well as of now, and have a lot less risk. Though best to have both to diversify, not just one IMO.
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